Debt Counselling: Sanjay Agarwal

Is there a fixed number on how many active credit cards and mobile numbers an individual can have in his/her name? No, there is nothing fixed about the number of credit cards or mobile phone connections a person can have.

My credit card issuer had offered me an option to pay my bill in equated monthly instalments (EMIs). I can pay my bill, but would not mind paying it slowly. My bill is Rs 1 lakh. Would you suggest this payment mode?Paying the outstanding amount on a credit card in EMIs is a good option, since the rate of interest applicable would be much lower than the revolving credit. Not only you pay an interest above 40 per cent per annum to avail revolving credit, but also have to pay the same interest rate on fresh purchases from the date of purchase.

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In both the cases your credit limit will be reduced by an outstanding amount, which will keep getting released as and when you repay. However, it will be advisable to compare the interest rates on standalone personal loans to clear entire credit card dues, which might be cheaper than the EMI option on the card and keep your credit limit intact. You may also consider taking a loan against a fixed deposit, which will be the cheapest option.

My credit card bill is Rs 2 lakh. I also have a personal loan of Rs 8 lakh. My monthly income was Rs 35,000 till four months earlier when I left the job to take a month-long break. I thought I would get another job, but that has not happened. I thought of taking tuition classes to keep my loan repayment going. But, I haven’t got enough students. I have started getting letters from lenders. What can I do?Loans taken have to be repaid. As a first step, convert the credit card dues into an EMI payment option for the longest possible tenure, offered by most banks to save on the exorbitant interest applicable on the card dues. In the short term, I’d advise you to liquidate some of your financial investments or sell unused assets to pay your dues in part or full, till you are able to increase your earnings to take care of your debts. This will also help you in keeping your credit history healthy with the bureaus.

The writer is senior vice-president and group head, retail strategy and branding, at Arcil. The views expressed here are his own.